The South African government’s plans to reconfigure the state have raised questions about their precise meaning, scale, and timing. There’s an urgent need to cut costs and improve efficiency, given the budget deficit and the underperformance of state-owned enterprises like Eskom and Transnet. However, true “structural reform” may be challenging and politically costly. President Cyril Ramaphosa must present concrete plans in February to regain financial market confidence. Reconfiguring the state involves reducing government departments, but the criteria for these changes remain ambiguous. Repurposing the state, reducing complexity, and embracing digital solutions could lead to a more efficient and agile government, similar to successful e-governments in other countries.
Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.
Reconfiguring the state: Is it really politically possible?
By Jonathan Katzenellenbogen*
The government has plans to reconfigure the state. But the precise meaning of this and its scale and timing are still unknown.
The need to cut costs and improve efficiency is not in doubt, with the large budget deficit and the overall poor performance of the state. There have even been delays in the payment of social grants. Many of the state-owned enterprises are near collapse, and the performance of both Eskom and Transnet is a drag on the economy.
But like the term “structural reform”, which the ruling party uses to describe changes aimed at turning around key sectors dominated by the state, “reconfiguring” may prove difficult and fall far short of what is needed. Certainly, without private power producers our load shedding would be worse, but the coal-fired generator fleet remains in a state of mismanagement by Eskom.
With any deep reconfiguration, some of the changes would have to involve large political costs. Serious “structural reform” and reconfiguring of the state are likely to result in job losses and an end to cadre deployment and much patronage.
If something solid on reconfiguration is not presented by President Cyril Ramaphosa in February next year, the financial markets will be disappointed. They might no longer give the government the benefit of the doubt on its promises to control spending.
The plan to reconfigure the state was first announced during President Cyril Ramaphosa’s State of the Nation Address in February, and we have seen nothing so far. The only plans that have been revealed are those to scrap the public enterprises department and transfer responsibility for state enterprises to departments which cover the relevant policy areas.
Ramaphosa has also said that the number of ministries is to be reduced to below 30. There are currently 30, if the Presidency is included.
But after nearly nine months there are no hard plans. Last week, Minister of Finance Enoch Godongwana said plans to “rationalise government departments, entities, and programmes over the next three years” are being prepared.”
According to Business Times, the reconfiguration will start after next year’s State of the Nation Address, with a reduction in the number of government departments. Starting the process in an election year with the ANC under pressure might ensure that any big ambitions will have to be curtailed. Last week, Godongwana gave assurances to civil servants that their jobs would not be in the firing line. The fact is that extensive reorganisation designed to raise productivity and improve delivery usually does involve job losses.
The criteria that have been laid down might show considerable ambition, but these are also open to wide interpretation.
Godongwana has said that whether a department or entity should be closed or merged will depend on:
– the performance and size of the entity or department, especially if it is no longer fulfilling its mandate or does not have capacity to fulfil its mandate.
– the ability of a larger department to absorb the functions of a small department.
– the duplication and overlap of functions across departments and entities.
– the clarity and execution of the legislative mandate.
On the first criterion, there are many examples of failure which could be used to close or merge departments. These include the failure to pay grants on time, low matric pass rates in schools, and hospitals with high infant mortality rates. Certain departments, like health and education, cannot be scrapped and are unlikely to be merged. The other criteria make sense, but the question is whether these will actually be applied, along with higher performance standards.
The best place to start a reconfiguration of the state is with an exercise to re-purpose the state. What should the state really be doing?
Defence, law and order, health, education, documentation to do with births and deaths, identity and property ownership are core responsibilities. Other departments are peripheral or could be conducted in a very different manner. But any re-purposing of the state is a dream, so long as the ANC maintains an ideological faith in the role of the state in economic growth and addressing inequality.
Does the state really have to own and run public enterprises, when the same services can be better run by the private sector, free of political interference? The apparent exclusion of public enterprises from reconfiguration is a gaping hole in the initiative.
Placing the public enterprises in their appropriate line ministries is an exercise in futility. Does the Department of Energy or Electricity really know that much more about running a business than the Department of Public Enterprises?
Will the reconfiguration really mean a substantial cut in the number of departments, fewer regulations, less complexity, streamlining and a more user-friendly and effective government?
South Africa has 30 government departments, if the Presidency is included. And there are 32 Cabinet Ministers, including the President and Deputy President. Our Cabinet remains one of the largest in the world. In New Zealand, there are only ten cabinet members.
In South Africa, all departments are represented in the Cabinet, which is not the case in some other countries. Should departments such as Tourism, Sports, Arts and Culture, as well as Basic and Higher Education, be represented in the Cabinet? Meaningful discussions are more likely to take place in smaller rather than larger groups.
Is it really necessary to have government departments as well as regulatory agencies for agriculture, communications, forestry and fisheries, human settlements, mineral resources, small business and transport?
In this day and age, we do not need a government department as well as an agency to pay out grants. Registration of property transfers and companies might ultimately be done with blockchain technology, if the government allowed this to happen.
What is required above all is agility for effective government. Large companies frequently re-organise with mergers and acquisitions, the need to cut costs, and the taking on of new functions and the dropping of others. But governments tend to stick with their existing procedures despite technological change and different demands.
With digital solutions available for a range of government functions, a big rethink about repurposing is needed.
Some of the most efficient governments in the world are those that have re-purposed, reconfigured and become e-governments. In South Africa, the ID system creates a basis for a digital government, but these services are still in their infancy here.
Estonia’s system of digital government is probably the most advanced. Personal details are only taken once, reducing the need for form filling, and allow, for instance, child support payments to be made without an application. According to the Tony Blair Institute, the Estonian government estimates that the system results in annual savings equivalent to two percent of the country’s GDP, and has given back five days to every adult, every year.
Would the public sector unions and government allow for a South African e-government system which provides sufficient and timely transparency to keep the state really honest?
- Andrew Kenny explores morality: Why humans are worse than animals
- Investors reassured but medium term risks loom for SA economy – Thea Fourie, S&P Global Market Intelligence
- Powerful people are using State money to silence us – whistleblower Lehloma Ramajoe
*Jonathan Katzenellenbogen is a Johannesburg-based freelance financial journalist.
This article was first published by Daily Friend and is republished with permission